Some of the UK’s biggest pension funds have voted against reappointing BP’s chairman over a decision to weaken its climate plans, but the majority of shareholders backed Helge Lund. It comes after the energy giant cut back its target to reduce emissions by the end of the decade.
As well as the dissenting votes there were also disruptions during the annual meeting from climate protestors. BP said it valued “constructive challenge and engagement”.
The original target to reduce emissions was agreed by shareholders in 2022 and included a promise to cut greenhouse gas emissions by 35% to 40% by the end of this decade.
But in February, BP announced it was now aiming for a 20% to 30% cut so it could produce more oil and gas and extend the life of existing fossil fuel projects.
BP chief executive Bernard Looney said this was in response to increased concerns about energy security following the invasion of Ukraine.
The five pension funds told the BBC that their vote against the company’s chairman, Helge Lund, was a protest against the company’s actions.
The pension funds have £440m invested in BP, which represents less than 1% of the company’s total shares. But they manage the pensions of more than a third of the UK’s workers so are an influential voice.
Mr Lund received a majority of more than 90% for re-election during the annual meeting on Thursday.
Katharina Lindmeier, senior responsible investment manager at Nest, the government-backed pension fund, told the BBC: “Not only were we disappointed to see the company going back on the targets, but we were also really surprised not to have had any consultation.”
The five pension funds – Nest, the Universities Pension Scheme, LGPS Central, Brunel Pension Partnership and Border to Coast – are concerned that the new targets put BP financially at risk because the company’s fossil fuel projects are likely to lose value as the world moves towards net zero emissions.
Nest also told the BBC that there were concerns over BP’s actions on reducing gas flaring, after seeing the BBC documentary Under Poisoned Skies.
The BBC News investigation showed that BP was one of several major oil companies not declaring emissions from gas flaring at oil fields in Iraq, which produces cancer-linked pollutants.
Ali Hussein Julood, who documented his life in Rumaila, Iraq for the documentary, suspected his childhood leukaemia was due to the flaring. He passed away on 21 April after his cancer returned.
Ali’s father told the board of his son’s passing during the AGM, and how despite their efforts, there was still black smoke and gas flaring outside his front door.
Mr Looney gave his condolences at the meeting to Ali’s family and said: “We are continuing to reduce flaring at Rumaila. We are making progress and it must continue to be made”.
The pension funds told the BBC they only found out about the change in BP’s climate targets via media reports. They then approached BP to ask for a vote on the new targets but BP refused, arguing it was not a material change to the strategy.
Patrick O’Hara, director of responsible investment at LGPS Central, told the BBC: “If you change the strategy you should really enter into a dialogue with those that supported you.”
He said he thought BP’s decision was driven by short-term profit considerations rather than the long term sustainability of the company.
“Are these strategies science-based if you can flex them based on what the oil and gas price is? We are long-term investors and we expect the company to take a long-term view”, he said.
The company’s profits more than doubled to $27.7bn (£23bn) in 2022, as energy prices soared after Russia invaded Ukraine.
As well as protest voting, there were half a dozen green activists removed from BP’s annual meeting of its board and shareholders on Thursday, as they demanded the company “stop drilling” for fossil fuels.
The Dutch environmental organisation Follow This also put forward a resolution – supported by the five pension funds – which calls for more aggressive targets on what are known as scope 3 emissions – emissions from the use of its products.
BP recommended that shareholders not support this resolution calling it “unclear”, “simplistic” and “disruptive”.
ISS and Glass Lewis are the world’s largest investor services and recommended to BP shareholders they advise to oppose the climate resolution.
Courteney Keatinge, senior director for ESG research at Glass Lewis, said the company does not see BP’s actions to reduce its climate targets as a financial risk because the world will continue to use oil and gas past 2050.
“We are not operating under a net zero 2050 scenario, the demand is going to be there [in 2050], people will be flying planes and heating their homes”, she said.
The resolution only garnered 16.75% of the vote but that was up on 14.9% the same resolution received last year.
